Sales and Distribution of Vodafone

INDIAN INSTITUTE OF PLANNING AND MANAGEMENT

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SUBMITTED IN PARTIAL FUFILLMENT OF POST GRADUATE DEGREE

MASTER IN

BUSINESS ADMINISTRATION

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7th Nov. 2010

PROJECT REPORT

OF

SALES AND DISTRIBUTION MANAGEMENT OF VODAFONE

SUBMITTED BY :-GROUP NO. 101

MANOJ KUMAR SHARMA

DINESH JAKHAR

RAHUL SHARMA

KUNAL DABHAI

SUBMITTED TO:- Prof.

NAVAL ARORA

ACKNOWLEDGMENT

We are very thankful to the head of sales and distribution manager Mr. Ram

Krishnan Ayer of Vodafone Limited for their cooperation, without which

completion of this project would not have been possible.

We are extremely grateful to for sharing with us all the details of the project and providing us with valuable insights about sales, distribution function. We would like to thank them for the patience shown by him and being of such a great help to all our queries.

We would also like to express our gratitude towards our professors Naval Arora, for giving us an opportunity to do this project on sales and distribution and for being the guiding light through the completion of this project.

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EXECUTIVE SUMMARY

This project aims to study the distribution channels and the sales network patterns of the telecom sector through a Live Interview with the sales and distribution manager of VODAFONE LTD. Company in Rajasthan. In this project we have tries to bring out or explained how the sales and distribution network work for the Vodafone in Rajasthan and around the India.

The project was designed after detailed discussion with the company officials that is the Sales and distribution Manager for the distribution and sales functioning in Rajasthan.

This project is Based on the live Interview which is conducted for collecting the data /information from the Sales and Distribution Manager that how the sales and the distribution network is work. The project covers the sales network of the company with the dealers and that of the dealers with the customers.

In this project we have taken the Interview of the Sales and Distribution Manager Mr. Ram Krishnan Iyer, he had provided and avail the valuable information about the sales and distribution network of the Sale and Distribution.

Which help us in this project for knowing the sales management? And the whole project is based on the interview and the Sales and Distribution manager has told that take the company profile from the Internet and company website.

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Contents

CHAPTER NO – 1 INTRDUCTION OF PROJECT 06

1.1 TELECOMMUNICATION SECTOR IN INDIA 071.2 HISTORY OF INDIAN TELECOMMUNICATION 081.3 TELECOM SERVICES AVILABLE IN MARKET 111.4 GSM V/S CDMA 11

CHAPTER NO – 2 INDUSTRY OVERVIEW 12

2.1 BACKGROUND 122.2 GROWTH 132.3 INDIAN TELECOM MARKET 13

2.3.1 SIZE 132.3.2 STRUCTURE 142.3.3 SERVICES 142.3.4 SECTOR OUTLOOK 152.3.5 POTENTIAL 15

CHAPTER NO – 3 COMPANY BACKGROUND 17

3.1 COMPANY PROFILE 173.2 DRIVE OPRATIONAL PERFORMANCE 19

3.2.1 VALUE ENHANCEMENT 193.2.2 COST REDUCTION 19

3.3 PURSE GROWTH OPPORTUNITIES IN TOTAL COMMUNICATION 20

3.3.1 MOBILE DATA 203.3.2 ENTERPRISE 203.3.3 BROADBAND 20

3.4 EXECUTE IN EMERGING MARKETS 21

3.4.1 DELIVERY INEXISTING MARKETS 21

3.4.2 SELECTIVE EXPANSION AND CAUTIOUS APPROACH 21

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CHAPTER NO – 4 VODAFONE SALES NETWORK 22

4.1 VODAFONE OUTLETS 224.2 VODAFONE SHOPS 224.3 VODAFONE TELESHOPS 234.4 SALES KIT 23

CHAPTER NO – 5 DISTRIBUTION NETWORK OF VODAFONE 24

5.1 DISTRIBUTION NETWORK 245.2 SELECTION OF CHANNEL MEMBERS/DEALERS 255.3 RESPONSIBILITIES AND FUNCTION OF THE DEALERS 265.4 CHANNEL STRUCTURE OF VODAFONE 275.5 PREPAID SEGMENT 285.6 POSTPAID SEGMENT 28

CHAPTER NO – 6 OTHERS ACTIVITY 29

6.1 PERFORMANCE APPRAISAL 296.2 MARGINS 296.3 PROMOTIONAL ACTIVIES 29

CHAPTER NO – 7 ANNEXURE 30 CHAPTER NO – 8 KEY WORLDS 32

BIBLOGRAPHY

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CHAPTER – 1

INTRODUCTION OF PROJECT

This project aims to study the distribution channels, sales network and service patterns of the telecom sector that is Vodafone Ltd. The project also tries to bring out the shortcomings, if any, in the present system and thus recommends suggestions to improve the same. The project also gives insights into the various financial terms, norms of the sales and service departments as per the guidelines of the telecom industry.

The project was designed after detailed discussion with the company officials on three parameters i.e. distribution network, service network and sales functioning.

Firstly, the project discusses the distribution network of the company and the functions carried out by the channel members. Vodafone Limited being the largest services provider in Rajasthan definitely has a wider reach and more number of dealers. The project also covers the financial terms of the company with the dealers and that of the dealers with the customers. Secondly, the project discusses the sales functioning of the company, which includes aspects such as the hierarchy of the sales department prevalent in the company; the responsibilities and functions of the sales force, their performance appraisal structure etc.

Finally the project covers the service network of the company which deals with the after sale services and their effectiveness provided by the company and various complaints and queries are handled by them.

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1.1 INTRODUCTION OF TELECOMUNICATION IN INDIA

The world is waiting at our doorsteps, waiting for us to open the gates to an

economy bubbling with opportunities. The India growth story has already got the

world to sit up and take a note of the changing economic scenario. The Indian

government is doing everything that is possible to ensure that this story remains

intact. Factors, like the liberalization in the government stance and the daring

entrepreneurs of the Indian soils, have helped the sectors achieve the highs like

never before. And currently, the flavor of the month seems to be the telecom

industry.

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1.2HISTORY OF INDIAN TELECOMMUNICATION

History of Indian Telecommunications started in 1851 when the first operational land lines were laid by the government near Calcutta (seat of British power). Telephone services were introduced in India in 1881. In 1883 telephone services were merged with the postal system. Indian Radio Telegraph Company (IRT) was formed in 1923. After independence in 1947, all the foreign telecommunication companies were nationalized to form the Posts, Telephone and Telegraph (PTT), a monopoly run by the government’s Ministry of Communications. Telecom sector was considered as a strategic service and the government considered it best to bring under state’s control.

The first wind of reforms in telecommunications sector began to flow in 1980s when the private sector was allowed in telecommunications equipment manufacturing. In 1985, Department of Telecommunications (DOT) was established. It was an exclusive provider of domestic and long-distance service that would be its own regulator (separate from the postal system). In 1986, two wholly government-owned companies were created: the Videsh Sanchar Nigam Limited (VSNL) for international telecommunications and Mahanagar Telephone Nigam Limited (MTNL) for service in metropolitan areas.

In 1990s, telecommunications sector benefited from the general opening up of the economy. Also, examples of telecom revolution in many other countries, which resulted in better quality of service and lower tariffs, led Indian policy makers to initiate a change process finally resulting in opening up of telecom services sector for the private sector. National Telecom Policy (NTP) 1994 was the first attempt to give a comprehensive roadmap for the Indian telecommunications sector. In 1997, Telecom Regulatory Authority of India (TRAI) was created.

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TRAI was formed to act as a regulator to facilitate the growth of the telecom sector. New National Telecom Policy was adopted in 1999 and cellular services were also launched in the same year.

The August of 1995 saw the launch of the first mobile service in India, ‘Modi Telstra’ in Calcutta. However, the call rate structure; with an outgoing call rate of Rs.16 a minute, incoming call rate of Rs.8 a minute and cell phones costing around Rs.15,000 were the prime reasons why the cellular communication did not get the desired popularity. The New Telecom Policy in 1999 introduced several consumer-friendly initiatives. Only after the entry of private operators like Bharti Airtel, Hutch, Reliance, Tata, BPL, Idea, etc., who created a competitive market which further reduced operational costs, did the upward trend in the number of mobile subscribers started. The tariffs have come down substantially with Indian Mobile rates being the lowest in the world. The number of wireless subscribers rose from 16 million in 2003 to 317 million at the end of May 2008. With this, India has become one of the fastest growing mobile markets in the world. Already, The Indian market leader, Bharti Airtel has already crossed the 50 million customer mark to become one of the world’s top 10 operators and has become the fastest private telecom company in the world to achieve this milestone.

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1.2 TELECOM SERVICE AVAILABLE IN INDIA:-

The telecom services available in India include-

1. Basic Fixed Line Services2. Mobile Services (GSM & CDMA)3. Internet Services4. International Long Distance Services5. National Long Distance Service

1.3 GSM vs. CDMA

GSM and CDMA are the two main competing network technologies deployed by cellular service provider’s world over. GSM(Global System for Mobile Communications) Originated in Europe in 1990. The GSM Association is an international organization founded in 1987, dedicated to developing, providing and overseeing the worldwide wireless standard of GSM.

While CDMA (Code Division Multiple Access) is a proprietary standard designed by Qualcomm Inc in United States and has been the dominant network standard for North America and parts of Asia. It became an international standard in 1995.

However now, GSM networks have penetrated the United States and the CDMA networks have spread in other parts of the world. People of both the camps claim that their architecture is superior to the other.

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CHAPTER NO – 2

INDUSTRY OVERVIEW

2.1Background

The Indian Telecommunications network with 203 million connections is the third largest in the world and the second largest among the emerging economies of Asia. Today, it is the fastest growing market in the world. The telecommunication sector continued to register significant success during the year and has emerged as one of the key sectors responsible for India’s resurgent India’s economic growth.

Telecom sector accounts for 1 percent of India’s GDP. Likely to double in 2-3 years.

Telecom services contribute 30 percent to India’s total service tax revenue.

The Indian telecom sector gives direct employment to more than 4,00,000 people, compared to about 6,00,000 people in China.

Not just the enabler of software, BPO and IteS companies, it is also the lifeline of a fast growing E-commerce space.

State-of-the-art telecom infrastructure has led to the rise of cities like Mysore, Mangalore, Jaipur, Ahmedabad, Kochi on the software services map.

This has helped spread the benefits of a booming Indian economy to beyond metros and large cities, and wealth creation is happening in tier-2 cities.

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2.2 Growth

The sector, which was growing in the range of 20 to 25 per cent up to the year 2002-03, has moved to a higher growth path of an average rate of 40-45 per cent during the last two years.

2.3 Indian Telecom Market

2.3.1 SIZE

India is the fifth largest telecom services market in the world; $17.8 billion revenues in 2005.

Industry grew by about 36% in 2005 over 2004.

The Indian telecom market size of over $8.3 billion is expected to treble itself by year 2011-2012, according to Ernst & Young. Financial year 2012. Thus there is a significant opportunity for telecom players.

Telecom market has grown at about 25% p.a. over the last 5 years.

Wireless segment subscriber base grew at 85% p.a.: fixed line segment at about 10% p.a.

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2.3.2 STRUCTURE

The Indian telecom market has both public and private sector companies participating:

Public sector has over 60% market share, down from 90% in 2000. Private companies have added subscribers at a CAGR of 192% since 2000. Mobile operators have deployed both CDMA ( 16 million users) and GSM

(55 million users) wireless networks Value added service features constitute 10% of revenue today (2 % in

2001) POLICY. 74% to 100% FDI permitted for various telecom services. FIPB approval required for foreign investment exceeding 49% in all

telecom.

2.3.3 Services

100% FDI permitted in telecom equipment manufacturing. India has a telecom policy aims to encourage private and foreign

investment. An independent regulator – the Telecom Regulatory Authority of India

(TRAI). Revenue-share model for license issued by the Government for telecom

services in India. Unified access licenses are available for providing telecom services on a pan-India basis.

Planned opening up of National Long Distance (NLD), International Long Distance (ILD) and other value added services.

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2.3.4 Sector Outlook

India expected to be among the fastest growing telecom markets in the world.

Projected growth of 30-40% p.a. to reach 250 million subscribers by 2009-2010.

Over 3 million new users are added every month – mostly in wireless.

2.3.5 POTENTIAL

1. Favorable demographics and socio economic factors leading to high growth:

Growth of disposable income combined with changes in lifestyle Increasing affordability-low tariffs, easy payments plans and handset financing.

Increased coverage and availability of mobile services.

2. Investment opportunity of $22 billion across many years:

Telecom Devices and Software for Internet, Broadband and Direct To Home Services. Set Top boxes, Gateway exchange, Modem, Mobile handsets and consumer premise equipment’s, Gaming Devices, EPABX, Telecom Software.

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Telecom Services for voice and data via a range of technologies.

Applications and Content development ranging from gaming to education.

Nokia, LG, Ericsson are all investing in India.

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CHAPTER – 3

COMPANY BACKFROUND

3.1 COMPANY PROFILE

Vodafone limited

Vodafone, the world’s leading international mobile communications company, has fully arrived in India. Vodafone Essar announced today that the Vodafone brand will be launched in India from 21st September onwards.

The popular and endearing brand, Hutch, will be transitioned to Vodafone across India. This marks a significant chapter in the evolution of Vodafone as a dynamic and ever-growing brand. The brand change over the next few weeks will be unveiled nationally through a high profile campaign covering all important media.

Vodafone, the world’s leading mobile telecommunication company, completed the acquisition of Hutchison Essar in May 2007 and the company was formally renamed Vodafone Essar in July 2007. Asim Ghosh, Managing Director, Vodafone Essar, said “We’ve had a great innings as Hutch in India and today marks a new beginning for us. Not as a departure from the fundamentals that created Hutch, but an acceleration into the future with Vodafone’s global expertise.”

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Harit Nagpal, Marketing and New Business Director, Vodafone Essar, said, “This transition is probably the largest brand change ever undertaken in this country and arguably as big as any in the world. It is even larger than our own previous brand transitions as it touches over 35 million customers, across 400,000 shops and thousands of our own and our business associates’ employees.”

The Vodafone mission is to be the communications leader in an increasingly connected world – enriching customers’ lives, helping individuals, businesses and communities be more connected by delivering their total communication needs.

Vodafone’s logo is a true representation of that belief – The start of a new conversation, a trigger, a catalyst, a mark of true pioneering.

Vodafone established its presence in India in 1994 by acquiring the cellular license for Mumbai. It now has operations in 16 circles accounting for 70% of India’s mobile customer base. With over 27.7 million customers, it is one of India’s most reputed telecom companies.

Vodafone, under the Hutch brand, over the years, has been named the ‘Most Respected Telecom Company’, the ‘Best Mobile Service in the country’, and the ‘Most Creative and Most Effective Advertiser of the Year’.

Hutchison Essar is now part of Vodafone – the world’s leading international mobile communications company. Vodafone now has operations in 26 countries across 5 continents and 36 partner networks with about 225 million proportionate customers worldwide. Vodafone has tied up with Essar as its principal joint venture partner for the Indian operation. The Essar Group is one of India’s largest corporate houses with interests spanning the manufacturing and service sectors like Steel, Oil & Gas, Power, Telecom & BPO, Shipping & Logistics and Engineering & Constructions. The Group has an asset base of over Rs.20 billion (US$ 4.4.billion) and employs over 4000 people.

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3.2 DRIVE OPRATIONAL PERFORMANCE

3.2.1 VALUE ENHANCEMENT

They will drive operational performance through customer value enhancement (which replaces revenue stimulation) and cost efficiency. Value enhancement involves maximizing the value of their existing customer relationships not just the revenue. They will move away from unit pricing and unit-based tariffs to propositions that deliver much more value to our customers in return for greater commitment, incremental penetration of the account or more balanced commercial. This will require a more disciplined approach to commercial costs to ensure their investment is focused on those customers with higher lifetime value. They are confident that by targeting their offers, they can deliver more value to our customers and have a better financial outcome for Vodafone.

3.2.2 COST REDUCTION

Cost efficiency requires them to continue to deliver scale benefits by optimizing operating and capital expenditure. Across the Group they have a significant number of cost programmers, which they expect to reduce current operating costs by approximately £ 1 billion per annum by the 2011 financial year. This will offset the pressures from cost inflation and the competitive environment and enable investment in revenue growth opportunities. As a result, on a like-for-like basis, we are targeting broadly stable operating costs in Europe and for operating costs to grow at a lower rate than revenue in ACE (Africa and Central Europe) and APME (Asia Pacific and Middle East) between the 2008 and 2011 financial years. Capital intensity is expected to be around 10% over this period in Europe and to trend to European levels in emerging markets over the longer term.

3.3 PURSUE GROWTH OPPORTUNITIES IN TOTAL

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COMMUNICATION

3.3.1 MOBILE DATA

They have made significant progress on mobile data, with nnualized revenue of £3 billion. This is still a large opportunity, with the penetration of data devices relatively low in Europe and almost nil in emerging markets.

3.3.2 ENTERPRISE

They have a strong position in core mobile services and they have built a solid presence in 18 months in multi-nation accounts through Vodafone Global Enterprise. They will make the most of this strength to expand our offerings into the broader enterprise communications market locally. This means serving small and home offices (SOHs) and small-to-medium enterprise (SMEs) with shared platforms and services, supported by our local sales forces.

3.3.3 BROADBAND

They will adopt a market-by-market approach focused on the service, rather than the technology. It will be targeted at enterprise and high value consumers as a priority.

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3.4 EXECUTE IN EMERGING MARKETS

3.4.1 Delivery in existing markets

They are represented in most of the key emerging markets where significant growth is expected in the coming years. Our main focus now is on execution in these markets, particularly in India, Turkey and African footprint, following their agreement to acquire control of Vodacom.

3.4.2 Selective expansion and cautious approach

They will also try to maximize the mobile data opportunity. There are few potential large new markets of interest to us and they will be cautious and selective on future expansion.

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CHAPTER NO – 4

VODAFONE SALES NETWORK

4.1 VODAFONE OUTLETS

You want to go Vodafone and stay connected anytime, anywhere? Just visit a Vodafone outlet in your neighborhood and choose from a range of affordable Postpaid or Prepaid connections.

4.2 VODAFONE SHOPS

Whether you’re looking for a new Vodafone connection, or a fresh handset, you’ll find it here. You can also subscribe to any of our value added services or get more information on them. Pay your bills, get your queries answered, and lots more. Hutch Shops are located at very convenient locations around the country. Select your region to find one near you. Mobile Vodafone Shops Vodafone Shops are going on the move, to bring our services closer to you and to provide faster online service, right at your doorstep. You can visit a Mobile Vodafone Shop near you for:

Postpaid connections and add on cards. Prepaid connections and recharge cards Information on the latest talk plans. Bill payments via cash, cheque or credit card Demos and activation of our Value Added Services Queries, SIM replacements and much more.

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4.3 VODAFONE TELESHOPS

Did you know that a range of Vodafone services are available in your very own neighborhood? Just walk into a Vodafone Teleshop, just round the corner, for anything you need. At a Vodafone Teleshops you can buy a new postpaid or prepaid card, pay your bills, reactivate your connection, and much more.

4.4 SALES KIT

A dealer should carry the following in his sales kit:

a) All products leaflets (adequate quantities).

b) List of prospects with their addresses

c) Information about the competition in the market

d) Price list of Vodafone product and corresponding prices of competitor

products.

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CHAPTER NO – 5

DISTRIBUTION NETWORK OF VODAFONE

I.3 DISTRIBUTION NETWORK

A supply chain is described that consists of all the parties and their suppliedactivities that help us to create and deliver services to the final customer.The front channels are specially kept in mind.

ACTIVITIES:

Order Handling Storage Display Promotion Selling Information and feedback

I.4 SELECTION OF CHANNEL MEMBERS/DEALERS

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Vodafone follows a strict policy in selection of the dealers, and therefore it is necessary to fulfill the following pre- requisites to be eligible to become a dealer:

I. The dealers should have a sound financial background. The financial capability of a dealer is solely depended on the discretion of the company officials.

II. The dealers should have a good market reputation, since the dealers help the customers in forming the first impression a customer has about the company.

III. The dealer should have a good previous track record,i.e of timely payments, no criminal background etc.

IV. The dealers should have good market penetration. The company’s ability to gain maximum customers in this era of competition solely depends on the penetration the dealers have in the market.

V. The last criterion of dealer’s selection for Vodafone is the area the dealers cover. This would include different geographical areas which are covered by a dealer.

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I.5 RESPONSIBILITIES AND FUNCTIONS OF THE DEALERS

Vodafone believes in “Customer Loyalty” and thus Vodafone expects that their dealers apart from selling paint products should perform the following functions for better customer relations’ management:

I. Sales promotion through regular promotional schemes, road shows, campaigns etc. the expenses incurred by the dealers is shared by the company only if these activities are for promotion of the company and not of the dealer.

II. Recruitment- done under the guidance of certain Vodafone officials.

III. Training and development of manpower with company assistance.

IV. Servicing according to the size of orders.

V. Customer relation management.

VI. Promote other products of the company

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The dealer should be in regular touch with the customer, keep taking his feedback and ensure maximum customer satisfaction. The dealer should also try and convince the customer to try newer products of the company.

The dealer has to thus cater to 3 major areas:

a) Pre sale

b) Selling

c) Post sale service

I.6 CHNNEL STRUCTURE OF VODAFONE

CHNNEL STRUCTURE

Co. or direct sales Indirect sales Misc. sale

Business head DSA/DST DealersG.M. Sales Manager Shop OwnersShop Owners TLS Metro ShopsSales Consultants Telemarketing Executives Vodafone ShopsExecutives Field ExecutivesTele Marketing ExecutivesField Executives

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Prepaid segmentation

Individual bronze Individual silver Individual gold Individual platinum

IB IS IG IP

Postpaid segmentation

Individual bronze Individual silver Individual gold Individual platinum IB IS IG IP

(co.owned/co. paid) (co. owned indvl. Paid)

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CHAPTER NO – 6

OTHER ACTIVITIES

I.7 PERFORMANCE APPRAISAL

For the dealers-

Vodafone involves both external and internal agencies which conduct this survey

on a monthly basis.

I.8 MARGINS

The company gives margins at the time of sale of the product. The margin varies according to the type of the product.

I.9 PROMOTIONAL ACTIVITIES

Vodafone actively supports its cannel members with promotional activities. Vodafone helps performing these activities on a daily basis. Further these are dividing in to different levels which are:-

Zonal level-zonal staff is involved in this. These include various kinds of road shows.

Circle level-This has the FM radio and local newspapers.

CHAPTER NO – 7

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ANNEXURE

QUESTIONNAIRE

1) What type of sales organization structure do you possess?

2) What are the various channel structures in which you operate?

3) What are the various criterion/terms and conditions of selecting your

channel members?

4) What is the average Inventory Size you keep?

5) What is the average Order Cycle time?

6) What are the various modes of transportation adopted and cost incurred?

7) What are the methods of measurement and frequency of providing

appraisals to channel members?

8) What are the modes of by which you receive your payments:

I. Advance payment

II. Payment on Delivery

III. Credit Payment

9) In case you provide the credit period, what is the time limit?

I. upto15 days

II. 15-30 days

III. >30 days

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10) How frequently do you collect the feedback from your channel

members?

11) What are the margins you provide to your Channel Members?

12) Do you support your Channel Members by promotional activities?

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CHAPTER – 8

KEY WORLDS

SALES

In bookkeeping, accounting, and finance, Net sales are operating revenues earned by a company when it sells its products. Revenue (net sales) are reported directly on the income statement as Sales or Net sales. DISTRIBUTION CHANNEL

A way of selling a company's product either directly or via distributors; "possible distribution channels are wholesalers or small retailers or retail chains or direct mailers or your own stores".

POST PAID

A model of cellular service whereby the customer is charged for usage in the prior month (hence 'post' usage), and hence does not feature any limitations on volume of service used.

PREPAID

A model of cellular service whereby the customer is charged for usage in prior

month and pay before using the services.

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BIBLIOGRAPHY

collegesavings.about.com

wikipedia.org

www.st-patricks.ac.uk

www.sba.gov

www.pinsentmasons.com

wordnetweb.princeton.edu

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